What To Expect From Salesforce Earnings This Quarter

Salesforce.com (CRM) is scheduled to report its earnings after the market closes on Wednesday. As a major player in the tech industry, Salesforce's earnings reports are closely watched by investors and analysts alike. The stock, which hit a record high of $318.71/share in 2024, was trading near $269 before Wednesday’s open. Known for its volatility post-earnings, Salesforce could see significant movements based on its performance. Here’s what the Street is expecting and a deeper look at the company’s fundamentals and technicals.

Key Takeaways

Expected Earnings: Analysts expect Salesforce to report $2.38 per share in earnings on $9.14 billion in revenue, with a Whisper number of $2.45 per share.
Historical Growth: Salesforce has demonstrated significant earnings growth, with future projections indicating continued upward momentum.
Technical Signals: The stock is trading below its 50-day moving average but above its 200-day moving average, reflecting mixed technical indicators.
Institutional Confidence: Increased ownership by high-ranked funds indicates strong institutional confidence in Salesforce.
Market Reaction: Observing how the stock reacts post-earnings will be crucial, as Salesforce is known for its volatility following earnings reports.

Earnings Preview

Expected Earnings and Revenue

Analysts expect Salesforce to report earnings of $2.38 per share on revenue of $9.14 billion. However, the so-called Whisper number, which represents the Street's unofficial view, is slightly higher at $2.45 per share. This indicates some optimism among analysts regarding Salesforce's performance this quarter.

Historical Earnings Growth

Salesforce has shown impressive earnings growth over the past few years. In 2020, the company earned $2.99 per share, which increased to $4.92 in 2021, dipped slightly to $4.78 in 2022, and rose again to $5.24 in 2023. Looking ahead, earnings are expected to grow significantly, with projections of $8.22 per share in 2024, $8.31 in 2025, and $9.49 in 2026.

A Closer Look At The Fundamentals

Company Profile

Salesforce, Inc. provides Customer Relationship Management (CRM) technology, bringing companies and customers together globally. The company’s services include sales data management, lead monitoring, opportunity forecasting, analytics, artificial intelligence, and comprehensive customer support. Salesforce’s platform also offers tools for business workflow and app development, online learning, and productivity through Slack.

The company’s marketing services enable personalized customer journeys, while its commerce services enhance shopping experiences across multiple touchpoints. Additionally, Salesforce offers robust analytics solutions with Tableau and integration services through MuleSoft. The data cloud service provides a scalable data engine, and Salesforce also caters to various verticals, including financial services, healthcare, manufacturing, and government sectors.

Technical Analysis

Stock Performance and Moving Averages

Technically, Salesforce’s stock is currently trading 15% below its record high. It is below its 50-day moving average but above its longer-term 200-day moving average, presenting a mixed technical signal. Strong stocks typically trade above their rising 50 and 200 DMA lines. It is also notable that the number of high-ranked funds owning the stock increased from 4,588 in June 2023 to 4,919 in March 2024, indicating strong institutional accumulation.

Market Reactions and Expectations

How the Market Reacts

The most critical factor to observe during earnings season is how the market and the stock react to the news. Salesforce has a history of significant post-earnings volatility. A strong earnings report could see the stock gapping up, while disappointing numbers could result in a gap down.

Institutional Sentiment

Analysts and investors are keenly focused on Salesforce's ability to continue its growth trajectory. Goldman Sachs recently upgraded PDD Holdings, another tech firm, to "buy," citing growth momentum. Similar growth expectations are held for Salesforce, especially considering its robust product offerings and expanding market reach.

Conclusion

Salesforce's upcoming earnings report is highly anticipated, with significant expectations from analysts and investors. The company's historical performance, coupled with strong institutional support, sets the stage for potentially impactful market movements. As Salesforce continues to innovate and expand its offerings, all eyes will be on how it meets or exceeds market expectations in its latest earnings report.